Sounds like dropsy. This is usually more a sign of organ failure, as was suggested, specifically kidney failure. It not usually contagious, although the cause may be. I read a post about some more humane way to euthanize fish. I have a fish disease book. I'll look up treatments. Fish can die by themselves very quickly with full blown dropsy.
About euthanasia. If your going to freeze anyway, try sedating with clove oil first. I think you can order it at pharmacies or buy it at health food stores. It is not very soluble in water, so you have to dissolve a few drops in a small volume of hot water, and then mix it into the quarentine tank, or wherever. I also once read the active ingredient in ambesol is a fish poison, but I'm not sure you should try this, although it can't be much worse than boiling to death (ouch!!). Also Petco uses some product called FinQuel, I think, for aquatic euthanasia.